Magazine

I Think I'll Watch TV -- On My Cell Phone

April 17, 2005

Video-on-the-go has long been a dream of cell-phone companies worldwide. Carriers have spent the better part of a decade building networks capable of carrying fast video streams, partly in hopes of boosting profits by hooking customers on clips of pop singers and soccer goals. But just as those networks are starting to work well enough that consumers might actually want to tune in, new technologies are emerging that could steer eyeballs away from the services.

The new systems will allow broadcasters to beam programming to tiny screens on the move, using technology akin to today's TV rather than more expensive cellular networks. One of the most promising, Digital Multimedia Broadcasting -- or DMB for short -- will soon go live in South Korea. On Mar. 28, Seoul awarded licenses to six broadcasters who will start DMB programming by mid-summer. Mobile couch potatoes will be able to watch everything from baseball games and soap operas to the evening news -- all for free -- on cellular handsets equipped with special chips, which Korean giants Samsung Electronics Co. and LG Electronics Inc. have started producing. Once the rollout is underway, the Korean researchers who developed the technology hope to persuade Europe to adopt it before next year's World Cup soccer competition in Germany.

The stakes for Korea are high. In the past decade, the country has poured billions into research and infrastructure to make Korea a leader in broadband and cellular. But as others start to catch up, Seoul is developing new areas where it can achieve a similar edge. One of those is mobile video. The state-funded Electronics & Telecommunications Research Institute (ETRI) spent $40 million developing DMB over the past three years. ETRI expects mobile video receivers to become a $35 billion annual business globally by 2010, creating nearly 88,000 jobs in Korea along the way. "DMB will be one of a few crucial IT projects powering Korea's advance into the ranks of truly advanced countries," says Ryu Peob Min, a director at the Ministry of Information & Communication in Seoul.

The combo of TV and cell phones makes sense. While some of the 11 million receivers ETRI expects Koreans to use by 2009 will be handheld TVs and car-based units, the vast majority will be integrated into phone handsets. That's because they already have the most important component: a screen. "To make a phone double as a DMB terminal, all you need is [a few] chips," says Byun Sang Kyu, a senior researcher at ETRI. The chips today cost about $100, but that price should drop sharply as production picks up.

EASY SWITCH

Korea faces a couple of potential hurdles. First, DMB isn't the only technology out there. Nokia (NOK) is pushing a standard called DVB-H (for Digital Video Broadcasting-Handheld) that has wide industry backing, while Qualcomm (QCOM) has its own version, MediaFLO. And even some Korean stalwarts aren't fully committed to DMB. "We are prepared to bring out handsets to support all types of mobile TV technology," says Lee Kyung Ju, a vice-president at Samsung, which has also developed a DVB-H phone. Just as problematic, cellular companies may not be excited about selling handsets that allow customers to spend time watching free content instead of forking over $10 to $15 monthly for clips.

The Koreans argue that those obstacles are easily surmounted. One big advantage is that DMB is hitting the market roughly a year ahead of Nokia's and Qualcomm's initiatives. And DMB is based on an existing European standard for digital radio, so European broadcasters will be able to add video at relatively little extra cost, whereas DVB-H and MediaFLO would require allocation of new frequencies and more expensive investment. Cellular networks, meanwhile, weren't designed for the volume of data that broadcast video requires. ETRI researchers say DMB will free up expensive telecom pipelines for higher-margin data services such as music-on-demand or video phone calls. It's unclear whether video-on-the-go will pay off for South Korea as its commitment to broadband and cellular have. But with millions of Koreans tuning in, the world will soon find out.